Picture: pickpik.com

October 8, 2020

USDCAD open (6:00 am ET) 1.3234-38, Overnight Range 1.3235-1.3264

  • FOMC minutes do not offer any new insight
  • Reported Mnuchin/Pelosi meeting revives risk appetite
  • US Jobless claims rise more than expected

FX Ranges at a Glance

Source: IFXA Ltd/RP

FX Recap and Outlook:  US Jobless claims rose 840,000 as of October 2, a tad higher than expected but still an improvement on the week before.  The news was a non-event for FX markets but supported US equity futures.

The Dow Jones Industrial Average closed with a 1.91% gain, setting the stage for an upbeat Asia equity session.  Chinese markets were still closed by Japan’s Nikkei 225 climbed 0.96%, and Australia’s ASX 200 rose 1.09%.  European Bourses and S&P 500 futures are also higher.  The bulk of those gains were because of a report that Treasury Secretary Steven Mnuchin and Nancy Pelosi are meeting today to discuss a “narrow-scope” COVID-19 Relief bill.

The FOMC minutes were not illuminating.  In a nutshell, the Committee members appeared to be more concerned about how they would manage the message that they didn’t have a clue where the economy was going,  why inflation is low.

EURUSD inched higher in Asia and retreated in Europe, all the while staying in a 1.1754-1.1781 range.

Traders didn’t appear to be perturbed about Germany shrinking trade surplus.  They also ignored comments from ECB official Luis de Guindos who said: “Inflation expectations are very subdued as a result of the pandemic and some specific factors and we have to act with the tools available to us.”

GBPUSD is trading close to its overnight low, after touching 1.2969 after comments from EU Chief Trade negotiator Michel Barnier that he didn’t think the UK would walk were countered by Prime Minister Boris Johnson essentially saying “watch.” New coronavirus concerns also limited GBPUSD gains.  The UK health Minister warned hospitals were ten days away from a critical stage.

USDJPY consolidated yesterday’s gains in a narrow 105.93-106.10 range.  Traders are awaiting developments from the Mnuchin/Pelosi meeting and today’s US weekly jobless claims data.

AUDUSD outperformed NZDUSD as both currency pairs inched higher. AUDUSD gains were on the back of US stimulus hopes while negative interest rate concerns slowed NZDUSD gains.

USDCAD tracked the antipodean currencies and dropped from 1.3264-1.3235. Traders are looking ahead to Bank of Canada Governor Tiff Macklem’s speech titled “The Global Risk Institute and the evolution of risks during a pandemic.”

US weekly jobless claims are expected to fall to 820,000 from 837,000 last week. FX traders will take their cue from Wall Street and headlines about new US stimulus.

USDCAD Technicals: The intraday technicals are bearish after breaking below 1.3250, the uptrend line from September 7.  The break confirmed a breach of the 38.2% Fibonacci retracement level of the September 7-30 range, which suggests further losses to 1.3105, the 76.4% Fibonacci level.  For today, USDCAD support is at 1.3220 and 1.3170.  Resistance is at 1.3270 and 1.3340.  Today’s Range 1.3180-1.3270

Chart: USDCAD 4 hour

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank